JPY news - page 23
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USD/JPY Weekly Forecast for November 14-18
USD/JPY rallied throughout the majority of last week, after recovering from a sharp spike to the downside in reaction to the U.S. Presidential election. The recovery from this spike lower and the subsequent advance confirmed a successful test of support at the October 7th low and took out resistance defined by the late October corrective top. The pair closed out the week at 106.635, up 3.4% over the prior Friday’s close.
In play as a result of the advance in USD/JPY is the pair’s 200-day moving average. And, with fully overbought conditions now a factor on both a daily and weekly basis, the week has the potential to start off with a move to the downside. Signs of hesitation on the upside were indeed evident on Friday, given the inability to move above Thursday’s high and modestly lower close.
On the downside, support is now at the former high established October 28th at 105.532. Holding this level during the current downside reaction would keep the overall bias in the pair firmly to the upside. A break below this former high would be a negative technical development for the short term outlook and imply a return to the recently tested support at 102.86 cannot be ruled out.
Maintaining above the 105.523 level during a pullback keeps the short term bias firmly to the upside, with the price target for the pair at 107.494, representing the July rally high. On a break above this level, the target becomes the late May high at 111.450.
Expectations for a rate hike increase in the U.S. in December should help support the dollar going forward, benefiting USD/JPY. Expectations of an interest rate hike in the U.S. increased at the end of last week, with fed fund futures currently indicating an 81% probability of a rate increase, up from 71.5%. Fed Vice Chair Stanley Fisher, in his first remarks since the election of Donald Trump as U.S. President, were supportive of a rate hike, as he noted that economic growth prospects appear strong enough for the Federal Reserve to proceed with a gradual increase in interest rates.
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Yen weaker ahead of third quarter GDP, China data eyed
The yen held weaker in early Asia on Monday with key regional data sets ahead expected to set the tone, including provisional third quarter economic growth figures from Japan.
USD/JPY changed hands at 106.78, up 0.09%, while AUD/USD traded at 0.7556, up 0.16% ahead of key data out of main trading partner China
Japan reports third quarter GDP with a 0.2% gain seen quarter-on-quarter and a 0.9% pace year-on-year. Also on Monday, Japan reports industrial production for September which is seen flat month-on-month.
Later out of China comes fixed asset investment for October with an 8.2% rise seen year-on-year and industrial production expected up 6.2% and retail sales seen rising 10.7%.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last quoted at 98.99.
Ahead, European Central Bank President Mario Draghi is to speak at an event in Rome.
Last week, the dollar hit its highest levels in nine months against a basket of the other major currencies on Friday, boosted by expectations that the administration of U.S. President-elect Donald Trump will spur growth and inflation.
Expectations for higher U.S. interest rates also remained intact amid optimism that a pick-up in growth will allow the Federal Reserve to tighten borrowing costs.
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USD/JPY: The 'Buy-On-Dip' Cycle To Continue Targeting 115-120
While we had acknowledged the risk of the "final JPY strength" this autumn on the BoJ's limit and US elections, it has been our view that the USD/JPY's dips was to be bought as the 100-105 level was where medium-term directional risk was likely to reverse to the upside.
In our view, a Republican sweep would first lead to JPY strength on risk aversion, but eventually be the most bullish outcome for the USD/JPY.
The price action last week - a shallow dip - tells us two things about the USD/JPY.
First, the view that a GOP sweep would boost the USD/JPY was probably more widely shared than we had thought, so a dip failed to stretch.
Second, there may be more potential USD/JPY buyers than sellers, which is in stark contrast to last year, when there were many more potential USD/JPY sellers than buyers (Case for a stronger yen in 2016 18 December 2015).
The "buy-on-dip" cycle in USD/JPY is likely to continue as we expect the pair to reach 115-120 by end-2017. We remain constructive about Japanese equities and see banks, insurance continue outperforming REITs near-term.
source
Japanese JGB yields have now exceeded the BoJ's 0% yield target. Markets will now be watching closely to see if the BoJ adjusts the maturity of its purchases. Last week it bought mostly 5y bonds. As inflation expectations have risen in the US they have spilled over to Japan too, with the 10y breakeven now at 0.48%, rising from the 0.24% low in September ahead of the BoJ meeting.
Beyond the yield curve arguments, we think that USDJPY should be boosted further by a position and sentiment adjustment in the local Japanese community.
TFX retail positioning data show that Japanese investors added to their short USDJPY positions last week, suggesting that there is further USDJPY upside if their sentiment is adjusted by price action.
The next resistance area isn't until 111.55.
USD/JPY: Supported By Risk, Fed And US Reflation: Targeting 113 In 1-Month
USD/JPY has rallied significantly since Donald Trump was elected the next US President.
In the short term, we believe USD/JPY is likely to remain supported by improved risk appetite and expectations of a Fed rate hike in December, which we still call for. We lift our targets for USD/JPY to 113 (from 104) in 1M and 115 (from 106) in 3M.
Over the medium term, the case for higher yields on 10-year US treasuries and higher commodity prices has been strengthened by a rise in US inflation expectations, which are assumed to be supportive factors for USD/JPY. Hence, while the underlying JPY appreciation pressure stemming from, among other things, a large current account surplus is likely to remain intact, we expect US reflation to support the case for further portfolio investment outflows out of Japan, which combined with higher FX hedging costs on USD assets is likely to weigh on the JPY. We now target USD/JPY at 115 (previously 106) in 6M and 115 (was 106) in 12M.
For the longer term forecasts, we see risks fairly balanced but stress that uncertainty is unusual high given the many unknown factors for US economic policy under Trump.
USD/JPY forecast for the week of November 21, 2016
The USD/JPY pair broke out to the upside over the last week, clearing the 110 level. The extraordinarily bullish candle looks as if it is telling us that the trend has completely changed now, and at this point I believe that pullbacks and show signs of support will be buying opportunities. Ultimately, this is a market that will continue to offer buying opportunities on those pullbacks, and cannot be sold based upon the significant outburst of buying pressure that we’ve seen after the election of Donald Trump. With this, I believe we continue to go much higher.
USD/JPY Weekly Forecast for November 21-25
Strength in the dollar propelled USD/JPY the highest level traded since late May of this year last week. The pair reached 110.951 for a high and closed out the week up against the highs, gaining 4% for the week overall.
Since bottoming in early November, USD/JPY has gained 7.7% and, as a result, has become extremely overbought. This factor, combined with the close proximity of resistance, suggests a period of correction, or at least consolidation, could develop over the near term.
On a move to the downside, first support is at the 108.510 level, as can be seen on the 4-hour chart. Holding this level on a move to the downside would leave the pair well-positioned to resume the upmove over the near term and result in no damage to the broader bullish technical condition. The first level of significant support for USD/JPY is at former resistance at July’s 107.494 high. At present, given the strength in the dollar, a correction is not expected to drive the pair down as far as this former high.
The dollar moved steadily higher throughout last week’s trading, trading to levels not seen since 2003. Expectations of an interest rate increase have helped push the dollar higher, as well as expectations of higher inflation. Last week, it was reported that US CPI increased 0.4% in October, as expected. The annual inflation rate was at 1.6%, from 1.2% previously. This increase was in line with market expectations and is the highest annual inflation rate since October 2014. The data maintains expectations of a December Fed rate hike. At present, fed fund futures are pricing in a 95.4% probability of an interest rate increase at the December FOMC meeting, up from 90.6% on Thursday and 85.8% at the start of the week.
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October trade balance data from Japan
- expected Y 610bn, prior was Y 497.6bn
Trade balance (adjusted): Y 474.3bn- expected Y 403.3bn, prior was Y 349.0bn
Exports -10.3% ... Miss- expected -8.5% y/y, prior -6.9%
Imports -16.5% ... MissUSD/JPY Weekly Forecast for November 21-25
Strength in the dollar propelled USD/JPY the highest level traded since late May of this year last week. The pair reached 110.951 for a high and closed out the week up against the highs, gaining 4% for the week overall.
Since bottoming in early November, USD/JPY has gained 7.7% and, as a result, has become extremely overbought. This factor, combined with the close proximity of resistance, suggests a period of correction, or at least consolidation, could develop over the near term.
On a move to the downside, first support is at the 108.510 level, as can be seen on the 4-hour chart. Holding this level on a move to the downside would leave the pair well-positioned to resume the upmove over the near term and result in no damage to the broader bullish technical condition. The first level of significant support for USD/JPY is at former resistance at July’s 107.494 high. At present, given the strength in the dollar, a correction is not expected to drive the pair down as far as this former high.
The dollar moved steadily higher throughout last week’s trading, trading to levels not seen since 2003. Expectations of an interest rate increase have helped push the dollar higher, as well as expectations of higher inflation. Last week, it was reported that US CPI increased 0.4% in October, as expected. The annual inflation rate was at 1.6%, from 1.2% previously. This increase was in line with market expectations and is the highest annual inflation rate since October 2014. The data maintains expectations of a December Fed rate hike. At present, fed fund futures are pricing in a 95.4% probability of an interest rate increase at the December FOMC meeting, up from 90.6% on Thursday and 85.8% at the start of the week.
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